If the bank real interest rate is 2 percent, the percent gain in physical capital gain is 2 percent, the marginal product of capital is 3 percent, and the percent dividend return is 5 percent, what is the financial capital gain?

Question

Quizplus · Accepted Answer

The financial capital gain is the difference between the marginal product of capital and the real interest rate. In this case, the marginal product of capital is 3 percent and the real interest rate is 2 percent, so the financial capital gain is 3 percent - 2 percent = 1 percent.

If the Bank Real Interest Rate Is 2 Percent, the Percent